We need a big breakthrough somewhere… a big project: West Bengal FM

West Bengal Finance Minister Swapan Dasgupta says the state needs a breakthrough investment project to revive industry, restore investor confidence and drive economic growth

West Bengal’s new Bharatiya Janata Party (BJP) government assumed office with high expectations of reviving the state’s investment climate, after the party’s Assembly election victory in May. In an interview at the Indian Council for Cultural Relations (ICCR) in Kolkata, a month after presenting the Budget, West Bengal Finance Minister Swapan Dasgupta tells Ishita Ayan Dutt that the state faces legacy issues and must “walk the extra mile” to attract investment, adding that the first five years will be crucial in setting the tone. Edited excerpts:

 

What is your overall assessment of the economic condition your government inherited in Bengal? 

 

 

We inherited what could best be described as a devastated area. We inherited a state that had become completely dysfunctional -- not just the economy, but even society. Hopelessness had permeated into the collective psyche of people, whereby they felt that it was a lost case and the future belonged to those who somehow got out.

 

What compounded that feeling were two things: One, a sense of loss because West Bengal was not a place that had never tasted development; it had once been at the forefront of it. Even if this generation did not know, an earlier generation knew what the good times were.

 

For the older generation, it was particularly sad because they were the left-behinds. Their children and grandchildren, who had found success elsewhere, had left for greener pastures. That feeling of loss made the overall mood even more tragic. That was what we inherited.

 

What are the three structural changes you want the economy to undergo over the next five years? 

 

We first have to link our economy to the national economy. It was erroneous, for the past 50 years and under two successive governments, to imagine that West Bengal operates as an island. We have to reintegrate ourselves into the national economy and, perforce, align ourselves with the way the central government functions.

 

Secondly, I think we have to change the manner in which we look at business. There has always been an inherent negativism that dictated the way not only the government but also large sections of society viewed business. It had something to do with the legacy of militant trade unionism in the 1960s, the turbulent Naxalite period, followed by the Left Front's approach towards industry, and finally, the Singur catastrophe. All these legacy issues were there.

 

So we first have to convince people -- both society and the bureaucracy -- that we have to walk that extra mile to bring business back to West Bengal. Otherwise, we are going to perish and become a tiny corner of India that survives on handouts.

 

We have to make the state attractive. It’s a monumental project.

 

Relations between the Centre and the previous government were very strained. How much of a competitive advantage does this political alignment provide, particularly in terms of attracting private investment?

 

For 50 years, we had a strained relationship with the Centre, and at times, that strain became one of needless combativeness. It’s one thing to have a divergence of views, but this went far beyond that, particularly in the past 10 years, when normal relations between the Centre and the state had completely broken down.

 

So, we first have to introduce into West Bengal a lot of what (systems) that had already happened in the rest of the country. That extends to how births, deaths, and registrations are handled across the rest of India, bringing Bengal back onto the same track.

 

Second, in terms of the investment schemes that the Centre had, which were not operational in Bengal, we can identify those one by one and put them back in. That’s proving very useful because we were otherwise facing a huge budgetary black hole. These schemes help fill that budgetary gap.

 

But more than that, once everybody knows that West Bengal is back in favour and back in the larger scheme of things, there is a greater willingness to consider it. Of course, investment doesn’t depend only on that, but at least people are taking a closer look at West Bengal.

 

Then there’s the double-engine issue. Odisha has it, and Assam has it, so there’s no real competitive advantage in that sense. But at the same time, there is no competitive disadvantage either, and we have to make the best possible use of that.

 

There are certain locational advantages that West Bengal has. Kolkata is still, for historical reasons, regarded as the premier city of eastern India, and we have to leverage that to our benefit. To do that, having the Centre’s blessing, if you might call it that, is useful.

 

Several large industrial projects have bypassed West Bengal in the past. What would you say to a CEO deciding between investing in West Bengal and another state, such as Gujarat, Maharashtra, Tamil Nadu, or Andhra Pradesh?

 

A lot of people want a foothold in eastern India. And for that, we think we are reasonably well placed. We are not as competitive in some respects as Odisha, which is very rich in minerals and has access to ports. But we are not too bad either. There is a good lifestyle in Bengal. It’s been a favoured destination for a long time.

 

In the broader all-India context, southern and western India still have a significant advantage over us. We are not going to get there immediately, but we have to aspire to.

 

Even in terms of technology, southern and western India are far ahead, and we don't have that ecosystem. We have to build it. So, this is not a project that can be accomplished in five years. But those five years are very important in setting the tone for West Bengal.

 

You announced a ₹5,000 crore incentive scheme for industry in the Budget. Do you think this is enough to attract investment?

 

No, it’s not enough. We’ll announce an industrial policy by August 15. We’ll also announce the GCC policy. This will not, per se, be adequate. But without it, it would be completely inadequate.

 

Initially, you will probably find companies and industries that already have a base in West Bengal announcing expansion plans instead of moving to Odisha, Assam, or elsewhere. To me, that’s the beginning, because we will at least have stopped the exodus. And that’s what we can hope for in the very short term. But we need a big breakthrough somewhere.

 

You mean a big project?

 

We need a big project. There is a lot of euphoria -- in two months’ time, the atmosphere has changed. But, investment decisions are not casual. People are going to wait. They are going to watch. What is the quality of governance? Has law and order improved? Have the syndicates and the extortion economy been suppressed? Is there evidence that the people are also with the government? All these factors are going to play a role.

 

So, my job is to ensure that at least the environment for investment is there. And that it is wholesome, so that we can actually knock on people’s doors and get a hearing.

 

In the past, if you spoke of West Bengal, you would be laughed out of court. Now, we are not. So, I’m not overstating what we are going to do, but acknowledging some of the difficulties; I’m optimistic. It is a challenge.

 

Do you have any sectors in mind for the “breakthrough”?

 

We have to wait for it. We are casting our net far and wide. It could be technology-driven or driven by a major investment. It could be a significant employment generator. It could also be the return of a major industrial house that had probably abandoned West Bengal.

 

We are trying everything. I assure you, we are leaving no stone unturned.

 

When you mention a big industrial house, the Tata group and the entire Singur episode come to mind. Are you referring to them?

 

That would be a very significant symbolic step if they came up with a major project.

 

If the Aditya Birla group also comes forward, we will recall what happened to Aditya Birla himself during the bad days, and how one very important section of the Birla family left Kolkata. But there are other major institutions and industrial houses as well that have not yet had a very meaningful role.

 

On the issue of incentives, there is an expectation from the industry that you would look at the arrears. Would you?

 

That was a very short-sighted decision on the part of the earlier government to scrap everything that was there, and to do so with retrospective effect. If you take it to court, I cannot foresee a guaranteed favourable outcome for this government. So, that is a problem. We have to make up for it. There is a backlog, and then we are also looking forward. How do we manage to blend both? This is going to be another challenge, given that the fiscal state of West Bengal is not entirely robust, to put it mildly. But it’s got to be done.

 

There is a way of looking at the backlog. Maybe we’ll have a negotiated settlement with a lot of people.

 

The point is, it was wrong on the part of any government to scrap incentives with retrospective effect. You can do it while looking at the future -- every sovereign government has the right to do that -- but not retrospectively. And that’s something that added to West Bengal’s uncertainty.

 

Chief Minister Suvendu Adhikari mentioned that the new incentive scheme would be linked to employment generation. Does that mean it would essentially be for MSMEs?

 

Well, MSMEs are the ones that generate the most employment.

 

But there are two or three things to consider. Employment is a very important factor in this; it’s crucial for securing public endorsement for your incentives. But on top of that, we will also have to consider whether new technology is being brought in, whether deep tech is being used, or whether it involves certain types of defence manufacturing.

 

And there are some companies that don’t want actual incentives. What they want is certain infrastructure to be developed.

 

Are you open to considering an incentive package on a case-by-case basis for a major or breakthrough project?

 

Any policy will have to have a degree of flexibility, especially on the vexed question of land. We understand that the industry is going to have a lot of difficulty with land, and we will have to help out with that in a big way. So, there is a degree of flexibility that comes in. As I said, it depends on what industry is coming in. If it’s going to be technologically significant and have a huge multiplier effect, then obviously, we will have to walk that extra mile.

 

How feasible is the revival of the Calcutta Stock Exchange?

 

That’s a question you should address to the members of the Calcutta Stock Exchange Board. How they plan to revive it -- whether as a commodities exchange, a platform for MSMEs, or for green bonds -- are among the various options and suggestions that are floating around. But ultimately, it’s something they have to do. And if Securities and Exchange Board of India (Sebi) is convinced, we will give them a helping hand.

 

Have you considered converting it into a heritage site?

 

Well, it is a heritage site. But there are two ways of looking at heritage sites: One is as a heritage site that virtually becomes a museum; the other is as a heritage site where modern-day operations take the heritage aspects into account. That approach has been used very successfully in parts of Europe, and we should learn from it.

 

There are two arbitral awards facing the state -- Haldia Petrochemicals and Tata Motors in Singur -- that have major fiscal implications. How do you plan to resolve these?

 

They have major fiscal implications, so we’re going to talk.

 

Are you going to negotiate a settlement?

 

We have to. In both cases, these are legacy issues; this government didn’t create the problems. I don’t think the verdict is necessarily going to be advantageous to us because those people were short-changed. Certain commitments that were made to them were not kept, and they have every reason to feel irked. We’ve started talking, and it’s been positive.

 

As far as I’m concerned, they’re not adversaries; they are important people. And if you don’t open a channel of communication -- and a very friendly one -- with them, you’re not going to make any headway.

 

We will, of course, have to talk about the implications of these awards. But overall, we also have to discuss the future with them.

 

Personally, I’ve known Purnendu Chatterjee (founder and chairman of the Chatterjee group) for many years, so we’ve resumed our conversations. And we are expecting to resume discussions with the Tatas; the ground rules have been set.

 

What will be your strategy on disinvestment? 

It was stated in the Budget that the first step is to list certain PSUs in the market. That’s actually the first step towards disinvesting a certain part. There are also a lot of dead assets awaiting disinvestment. We believe that a large section of the state government’s holdings are prime candidates for being released into the market.

 

What is the roadmap to the repeal of the Urban Land Ceiling Act? 

There are two or three different views on how this should be done. But overall, everybody is convinced that it has to be done. It is now a question of what the best legal approach is --whether through outright repeal legislation or some other mechanism.

 

On the fiscal position, what do you think will drive improvements to key indicators such as the fiscal deficit and debt burden? 

One of the things we are very keen on doing is improving compliance in revenue collection. We feel that the earlier regime was not very serious about it in certain areas, and as a result, we have under-collected. Ultimately, the revenue base of any state government is very narrow. So, we have to optimise revenue collection without necessarily raising taxes.